4 Steps To Navigate Through the Treacherous Financial Waters

by Roman on February 3, 2010

Let’s face it: almost everyone goes through a financial crisis at some point or another, and finding ways to deal with such situations is essential if you want to come out unscathed. If you have ever wanted to know what to do in the event of a financial emergency – whether it is due to a sudden illness or car trouble requiring immediate and costly attention–you have come to the right place! Here are some ideas on how you can weather the worst of the financial storm and come out none the worse for wear in the end.

1. Evaluate Your Financial Situation

The first thing that you should to when faced with an impending financial crisis is to sit down and think about your situation. Failure to identify the problem and pinpoint areas that need to be worked on will likely result in a more stressful situation, and that is the last thing that you need when short on cash. Going head on into fixing your financial troubles without making a plan first can result in even more confusion and the eventual failure of your attempts to get yourself out of a financial mess.

2. Determine The Nature Of The Financial Emergency

Is your emergency caused by a sudden illness of a family member? Have you been rendered broke by a natural calamity? Or have you lost your job like so many other people in the country? All of these different scenarios require different approaches, and identifying them will better enable you to formulate a clear plan of action.

Whatever problems you have – there is probably someone in the world who has already gone through the same thing. Use the internet to find these people and ask them what they did to survive.

3. Prioritize Your Spending

While you will ideally want to make sure that all of your outstanding debts and monthly bills are paid up, you do have a bit of leeway in terms of prioritizing your payments.

Make a list of your monthly expenses and group them according to importance or urgency.

Top on your list of priorities should of course be food and shelter, with utilities coming in a close second. You will also ideally want to set aside some money for medical emergencies. Such expenses are the first things you have to take care of when budgeting for your expenses, and you may have to sacrifice less essential expenditures such as cable TV and broadband Internet in order to be able to pay the more essential bills.

4. Negotiate a better deal with your creditors

This piece of advice may go against every grain of your being, but the first person you should get in touch with in the event of a financial emergency is your lender. Lending companies only stand to gain from you paying your debts, so they will be surprisingly willing to help you find a solution, whether it entails lowering your interest rates or extending your terms of payment. Waiting too long before you get in touch with your lender is definitely not a good idea, since the company may be far less likely to help you out than if you had approached them early on.

Welcome back! Love the navigating through financial waters analogy… Another thing you can do to weather the storm is to bring a friend along! For instance, if your friend is really good at budgeting and saving money you can ask them for help as I’m sure they’d be glad to help you back to your stable financial state.